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India’s retail inflation declines to 5.3% in August

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India’s retail inflation declined marginally to 5.30 per cent in August compared to 5.59 per cent in July, the National Statistical Office (NSO) under the Ministry of Statistics and Programme Implementation said Monday.  While the rural inflation was 5.28 per cent in August, the urban inflation was 5.32 per cent.

Notably, inflation has declined significantly if the figures are compared to August 2020 when inflation was pegged at 6.69 per cent. The decline in inflation comes due to a fall in food prices. Food prices declined to 3.11 per cent in August compared to 3.96 per cent in July.

The Reserve Bank of India (RBI) sees inflation ending up at 5.7 per cent in the year to March from 5.1 per cent previously. RBI Governor Shaktikanta Das has said policymakers were focused on helping see the economy through the pandemic and that’s the reason why the RBI has allowed the headline inflation rate to move between 2 per cent-6 per cent instead of having it at the 4 per cent mid-point of its target range.

“The price data are collected from representative and selected 1114 urban markets and 1181 villages covering all states/UTs through personal visits by field staff of Field Operations Division of NSO, MoSPI on a weekly roster. During the month of August 2021, NSO collected prices from 99.7% villages and 98.6% urban markets while the market-wise prices reported therein were 87.1% for rural and 87.4% for urban,” the NSO said in the statement.

India’s economic recovery

Despite the second wave of the pandemic, India registered a strong economic recovery in the June quarter, in line with the growth forecast made by several global agencies including the International Monetary Fund and the World Bank. While the IMF has predicted that India’s gross domestic product will grow by 9.5 per cent in 2021, the World Bank’s global economic prospects report has pegged India’s growth to be around 8.4 per cent. The RBI too has predicted the Indian economy to grow by 9.5 per cent.

 

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